Choking businesses

Justice Department program unfairly targets small commerce

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“Regulators don’t have the right to pick which businesses are moral.”

Attorney General Eric Holder was informed that his Operation Choke Point was harming small businesses by isolating them from banking services.  FILE/ASSOCIATED PRESS
FILE/ASSOCIATED PRESS
Attorney General Eric Holder was informed that his Operation Choke Point was harming small businesses by isolating them from banking services.

– U.S. Rep. Blaine Luetkemeyer, R-Mo.

What is it about this nation’s so-called talented, tolerant and transparent executive branch that makes it pursue and harass innocent Americans with a Gestapo-like passion?

No, we’re not talking about the partisan bureaucrats at the Internal Revenue Service who played red-tape bingo with conservative groups.

This time we’re talking about their partisan brethren at the Department of Justice who, under the guise of fighting consumer fraud, appear to be directing federal regulators to persecute legal business ventures in two-dozen industries the Obama administration finds repugnant – including gun dealers.

Unlike the widening taxpayer-targeting scandal, this Justice Department abomination has an official name – “Operation Choke Point,” aptly titled because it’s designed to literally choke off funding by making it difficult for businesses to retain and receive banking services.

As with the IRS targeting scandal, the Americans singled out by Operation Choke Point are considered guilty until proved innocent. And because bureaucrats are trying to shut down their businesses via their banks – which are cajoled under threat of costly federal subpoenas and investigations – those targeted are essentially denied legal due process in a court of law.

Just what are these “high-risk” businesses? They include legal-but-lowbrow ventures such as payday lenders, online gaming sites and pornography shops, but also more mainstream establishments such as gun-and-ammunition stores, tobacco merchants, fireworks companies and coin dealers.

Oddly – or perhaps not –
legalized marijuana shops and abortion providers did not make Operation Choke Point’s list of targeted industries.

The Federal Deposit Insurance Corp. recently stopped providing its hit list of industries to banks, acknowledging it created “a misperception” that regulators wanted institutions to avoid dealing with certain types of businesses.

But former FDIC Chairman William Issac called the program “one of the most dangerous” he has seen in 45 years as a bank regulator, attorney and board member.

“Once banking services are cut off to these state-licensed and regulated businesses, there is no chance for the business to appeal the decision,” he wrote in a column for The Hill. “The company is simply in a business that, while legal, has been determined ‘undesirable’ and therefore ‘high-risk’ by the federal bureaucracy. This Orwellian result is frightening.”

The program that began in secrecy in 2013 came to light earlier this year amid complaints from businesses whose banking ties were severed after federal regulators contacted their financial institutions.

Internal Justice Department documents show that the program continued even after Attorney General Eric Holder was informed it was hurting small businesses that were being dropped by their banks.

“We have also learned from industry sources that many banks are taking note of our activity and that of the regulators and doing what they should have done all along – due diligence to know their customers,” one Justice official noted in a brief to Holder.

Unfortunately, that government-coerced “due diligence” has led to wholesale termination of banking services in targeted industries.

A survey by the Financial Services Centers of America revealed 14 of 61 member banking relationships had been terminated since November. In June, the Community Financial Services Association and Advance America, a payday lender, filed a lawsuit against the FDIC, claiming that it exceeded its statutory authority and that its actions were “arbitrary and capricious.”

The United States Consumer Coalition announced a $5 million media campaign against Operation Choke Point, claiming that it was “created by the Administration to shut down lawful businesses by ‘choking off’ their access to banking services.”

The National Shooting Sports Foundation said financial services have been frozen for many of its members as a result of Operation Choke Point.

Kelly McMillan of McMillan Group International, an Arizona-based gun manufacturer, said her company’s 12-year relationship with Bank of America was terminated abruptly, which she sees as a back-door attempt at gun control.

“This is an attempt by the federal government to keep people from buying guns and a way for them to combat the Second Amendment rights we have,” she said.

Keep in mind, bureaucrats are targeting and disrupting businesses not because they have evidence of wrongdoing, but because they allegedly think they may be engaged in fraudulent activity.

It’s disheartening to see that the outrage over this governmental overreach is limited primarily to conservatives, as it is with the IRS targeting scandal. We wish more liberal-minded Americans would understand that nobody is safe when government exceeds its bounds.

Where would these fence-sitting Democrats be if Republicans held the White House and were directing bureaucrats to have financial institutions sever ties with, say, Planned Parenthood?

U.S. Rep. Blaine Luetkemeyer, R-Mo., a former bank examiner, last month introduced legislation that would end Operation Choke Point for a year while the House Oversight Committee investigates the operation.

“It is time to stop these back-door attempts by government bureaucrats to blackmail and threaten businesses simply because they morally object to entire sectors of our economy,” he said.

Rule of law is the foundation of American commerce. If companies break the law, then by all means go after them.

But “choking” out businesses for doing nothing more than being morally at odds with the current administration smacks of totalitarianism, which is about as un-American as it
gets.

Congress, when it reconvenes next month, should make passage of the Luetkemeyer bill a top priority.

Comments (26) Add comment
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deestafford
27564
Points
deestafford 08/10/14 - 12:41 am
16
3
Look, Obama and Holder are cut from the same cloth...

Look, Obama and Holder are cut from the same cloth. They are both socialistic fascist who feel they are untouchable because they are "clean, articulate'' blacks and can play the race card at the drop of a hat.

Neither of them care about the rule of law. All they care about is "social justice" and "fundamentally changing America". Only an unimformed individual who was so enamored with the chance to elect a black as president would have overlooked Obama's record. It was all there for anyone to see.

Holder's past is just as leftist as Obama's. Obama does not need to tell Holder what to do because they are two peas in a pod who are joined melntally on how to take America down to the level they think it deserves.

We still have idiots out there who think Obama can do no wrong as evident of the 40% job approval rating he has. We have the dumbest people in the Western World walking our streets in the US.

carcraft
25803
Points
carcraft 08/10/14 - 05:36 am
14
2
There seems to be no end to

There seems to be no end to the duplicity of Obama and Holder and no end to the scandals. I am getting more and more feed up with theses folks.

geecheeriverman
2415
Points
geecheeriverman 08/10/14 - 06:31 am
11
2
Obama administration

This is just one the illegal programs that is being carried on by this socialist regime. This is the worst POTUS in history. If the Dems keep control of the Senate in the November elections, we will continue to reap the misguided and illegal heavy handed socialist agenda of this corrupt regime.

Bodhisattva
6195
Points
Bodhisattva 08/10/14 - 06:38 am
4
13
Summary: The FDIC is

Summary: The FDIC is issuing the attached guidance that describes potential risks associated with relationships with entities that process payments for telemarketers and other merchant clients. These types of relationships pose a higher risk and require additional due diligence and close monitoring. This guidance outlines risk management principles for this type of higher-risk activity.

Highlights: • Account relationships with entities that process payments for telemarketers and other merchant clients could expose financial institutions to increased strategic, credit, compliance, transaction, and reputation risks.
• Account relationships with these higher-risk entities require careful due diligence and monitoring as well as prudent and effective underwriting.
• Payment processors pose greater money laundering and fraud risk if they do not have an effective means of verifying their merchant clients' identities and business practices.
• A financial institution should assess its risk tolerance for this type of activity as part of its risk management program and develop policies and procedures that address due diligence, underwriting, and ongoing monitoring of high-risk payment processor relationships for suspicious activity.
• Financial institutions should be alert to consumer complaints that suggest a payment processor's merchant clients are inappropriately obtaining personal account information.
• Financial institutions should act promptly when they believe fraudulent or improper activities have occurred related to a payment processor.

Distribution:
FDIC-supervised Institutions

Suggested Routing:
Chief Executive Officer
Executive Officers
BSA Compliance Officer

Related Topics:
Risk Management
FDIC Guidance for Managing Third-Party Risk (FIL 44-2008, June 2008)
FFIEC Handbook on Retail Payment Systems (March 2004)
FFIEC Handbook on Outsourcing Technology Services (June 2004)
FFIEC Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual

syfredrick
62
Points
syfredrick 08/10/14 - 07:20 am
4
13
Thanks For the Heads-Up

Now we know the next faux conspiracy that will be making the rounds. Guess that Benghazi thing isn't getting the play that it used to.

Bizkit
31329
Points
Bizkit 08/10/14 - 07:43 am
12
3
Just think if Bush had used

Just think if Bush had used these Nazi gestapo tactics the news media and Dems would be calling for impeachment

deestafford
27564
Points
deestafford 08/10/14 - 07:57 am
14
2
Bod, They are cutting off the financial..

Bod, They are cutting off the financial access of business which have been doing business with the same bank for decades.

It has nothing to do with financial risk. It has to do with businesses which the administration feels are not political correct or fits into what the statists think should not be allowed to exist.

Whatever happened to the concept of the bank having the relationship with the local business and them trusting each other?

Bizkit
31329
Points
Bizkit 08/10/14 - 08:09 am
8
3
Spot on Dee. Tobacco is out

Spot on Dee. Tobacco is out of vogue but it is still legal-as is porno. Which usually progressives support porno so I don't know why they have the problem.

Bizkit
31329
Points
Bizkit 08/10/14 - 08:10 am
6
3
Obama took over health care

Obama took over health care industry and laments he didn't also take over the banking industry.

historylover
8529
Points
historylover 08/10/14 - 09:27 am
4
13
It will never cease to amaze me

how some people will not even take the time to look up the facts or believe them when they are put in front of them in black and white. This editorial does not give enough information, just like so much of the "news" sources. Yet some of you just can't wait to jump on board the train - with no destination in mind.

Thank you Bod, once again for posting the truth.

Jon Lester
2297
Points
Jon Lester 08/10/14 - 09:29 am
1
4
Abortion clinics should be scrutinized for every good reason.

Legal marijuana shops should be left alone.

ymnbde
9723
Points
ymnbde 08/10/14 - 09:36 am
9
2
they're abandoning the rule of law

because they still, after abject failure, think they're "the ones we've been waiting for." any man who thinks he can actually cause the oceans to change depth and alter weather is not fit for the presidency
and he's proven he is not fit for the presidency
the gestapo didn't need laws, either

Darby
25614
Points
Darby 08/10/14 - 12:11 pm
7
2
You gotta wonder what Democrat

propaganda clearing house Bod goes to so quickly for his/her "validation" posts that he/she drops so often and so quickly in defense of OzBama's frequent Pearl Harbor like attacks on free enterprise.

Whatever, it makes for some really boring reading.

KSL
129373
Points
KSL 08/10/14 - 12:44 pm
6
2
I am still trying to wrap my

I am still trying to wrap my head around what payment processing and telemarketers, etc have to do with lending money to manufacturers.

KSL
129373
Points
KSL 08/10/14 - 12:55 pm
7
2
The point bod glosses over is

The point bod glosses over is that it was certain types of manufacturing, the kind the progressives don't like, just the same as the IRS targeting of certain groups. I don't want to know how much more corrupt this administration can get. I am furious with them for putting the health of American citizens at risk.

carcraft
25803
Points
carcraft 08/10/14 - 01:02 pm
7
2
Choke Point looks to me like

Choke Point looks to me like the "Fast and Furious " of the financial world. Illegal with some nebulous goal in mind. If you listen closely the sound you hear is hard drives crashing!

swcohen
586
Points
swcohen 08/10/14 - 01:52 pm
1
6
Meanwhile, in the schoolyard...

"Socialistic fascists." I see this a lot on these forums. Is this all-grown-up Conservative Republican - speak for people we as eight-year-olds would have called "poopyheads?" Kinda seems likely.

dichotomy
32906
Points
dichotomy 08/10/14 - 05:23 pm
7
2
No other regime in America's

No other regime in America's history has used the powers of this government to target individuals, groups, and industries like our current dictator and his minions. Obama has used government agencies for political purposes, personal ideology purposes, and social engineering purposes. This regime of lawless left wing radical Democrats has proven to even the blindest that it is time to reduce the size and powers of government and to eliminate, destroy, or severely reduce the size and scope of MOST government agencies....particularly the DOJ, EPA, and IRS.

But I have lost all confidence in Americans and their determination to remain free and keep this nation great. By all rights there should be blood running in the streets by now but we have sat and taken this crap from our own government like dogs with our tails tucked between our legs. The have targeted one group, one industry at a time and nobody has said or done anything. Obama and Holder have violated our laws and our Constitution almost daily. We should be in full revolt.

specsta
6505
Points
specsta 08/10/14 - 05:39 pm
5
1
More Info On Operation Choke Point

This does not look good at all...if a business is operating within the law, no matter the sort of business, that business has a right to be treated equally at any bank or financial institution.

http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/05/24/opera...

http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/05/24/opera...

historylover
8529
Points
historylover 08/10/14 - 06:00 pm
2
6
Gee Dichotomy

Sounds like you need some counseling. "Full revolt? Blood running in the streets?" Perhaps you're in the wrong country. Thankfully things like that don't happen here unless true madmen take over. Hmmm...

cush1944
8266
Points
cush1944 08/10/14 - 06:28 pm
4
2
"Thankfully things like that

"Thankfully things like that don't happen here unless true madmen take over. Hmmm..."
history, madmen that hate everything this country was based on are running this country.
"Blood running in the streets?" this will happen when something happens that causes blacks to riot. The democrats, liberals and black leaders like Jackson, Sharpton, Obama and Holders have been inciting it for years. It WILL HAPPEN.

historylover
8529
Points
historylover 08/10/14 - 06:33 pm
2
4
cush1944

Since you're not yet on my list of prophets, I'll just have to disagree with you. Sounds like you want IT much more than the people you listed.

Darby
25614
Points
Darby 08/10/14 - 06:37 pm
4
2
"Perhaps you're in the wrong country.

Thankfully things like that don't happen here unless true madmen take over." (and begin to trample on the rights of citizens as guaranteed under the Constitution.)

And we may be already started down that path.

CobaltGeorge
158541
Points
CobaltGeorge 08/10/14 - 07:30 pm
3
2
Darby

The hand writing is on the wall, I'm Lock, Loaded and Ready. It is the only action that will save America.

cush1944
8266
Points
cush1944 08/10/14 - 07:56 pm
3
2
" Sounds like you want IT

" Sounds like you want IT much more than the people you listed."
history, I do not want it at all but it will happen. The lying democrats and black leaders won't be able to stop it.

Darby
25614
Points
Darby 08/10/14 - 09:46 pm
6
1
"The hand writing is on the wall,

I'm Locked, Loaded and Ready. It is the only action that will save America."

.
Better to have it and not need it, than to need it and not have it!

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